MARJORIE CHUI v. CHENG CHIU CHEE MICHAEL

HCMP 1271/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1271 OF 2006

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D E C I S I O N

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Application

1. This is an application for appointment of administrator under section 35(1)(f) of the Probate and Administration Ordinance (Cap. 10) (“PAO”).  It states that:

“35.  On failure of executors

(1) Where—

(a) ……

(f) the executors do not apply for probate,

letters of administration with the will annexed may be granted to such person or persons as the court thinks fit.”

Preliminary matters

2. Both parties attempted to adduce further evidence shortly before the hearing.  I allowed both of them to do so, and as such the followings are also before me:

(a) affirmation of the Defendant dated 28 November 2006; and

(b) a copy Will (the “Revoked Will”) of Madam So Lai Fong (“the Deceased”) dated 30 December 1999.

Background

3. The Deceased died testate on 10 December 2000 leaving a Will dated 24 June 2000 (“the Will”).  She appointed both the Applicant and the Defendant as executors and trustees of the Will.  She further devised her estate (“the Estate”) in the followings:

(a)       the property known as Flat A, 18th Floor, Block 24, Hong Kong Garden (Phase III), No. 100 Castle Peak Road, Tsing Lung Tau, New Territories to the Applicant absolutely, and

(b)       all other estate to the Applicant, the Defendant, the daughter and the son of the Defendant (“the Granddaughter and the Grandson” respectively) in equal shares.

4. Since the death of the Deceased, Messrs. Dennis Wong & Co. was appointed by the Applicant and the Defendant to deal with the probate application.  Then, in about early 2001, the Applicant instructed Messrs. Johnson Stokes and Master to represent her.  Later, in about 2004, the Defendant disputed, among others, with Messrs. Dennis Wong & Co. about their bill(s).  He then looked to Messrs. Fong Yin Cheung & Co. (formerly known as Messrs. Chung Fong & Co.) to take up the matter.  In about the middle of this year, the Applicant also turned to Messrs. Burke, Fung & Li.  Regrettably, up to the date hereof, even the estate duty matter has not been cleared yet, not to mention an application for probate.

5. On 11 July 2006, the Applicant took out the present originating summons trying to resolve the problem by way of court proceedings.  I heard the substantive argument of the matter on 4 December 2006.  Mr. Patrick Lim of Counsel represented the Applicant and Ms. Vickie Ling of Counsel acted for the Defendant.  Although the Granddaughter and the Grandson have not been made parties to the proceedings, both of them were aware of the same and indeed attended the scheduled hearing.  Having heard from both Counsel, I reserved my decision to be handed down.  I now do so.

Ruling

6. Upon consideration of all the evidence authorities and submissions, I agree with the Applicant that her application should be allowed.  My reasons appear below.

(a) It is not disputed or indisputable that the Applicant and the Defendant is facing a deadlock. It is unlikely to be resolved in any foreseeable future.

(b) Ms. Ling argued that the present proceedings were unnecessary because the Applicant should have renounced her right as an executor or issued a citation against the Defendant.  I respectfully disagree.  It might be very true that the Applicant had a number of different options to choose to resolve the matter.  However, it is for the Applicant to decide her own course.  If the Applicant can satisfy me of the requirement under her choice, viz., section 35(1)(f) PAO, the application herein will be allowed.

(c) Ms. Ling further argued that the present proceedings were inappropriate because, even if section 35(1)(f) PAO was applicable herein, this Court had to follow the order of priority in rule 19 of the Non-Contentious Probate Rules (“NCPR”).

“19.     Order of priority for grant where deceased left a will

The person or persons entitled to a grant of probate or administration with the will annexed shall be determined in accordance with the following order of priority, namely—

(i) the executor;

(ii) any residuary legatee or devisee holding in trust for any other person;

(iii) any residuary legatee or devisee for life;

(iv) the ultimate residuary legatee or devisee ……

(v) any specific legatee or devisee or any creditor ……

(vi) any legatee or devisee, whether residuary or specific, entitled on the happening of any contingency, or any person having no interest under the will of the deceased who would have been entitled to a grant if the deceased had died wholly intestate.”     

Paragraph 35.02 of the Butterworths Hong Kong Probate and Administration Handbook was relied to support the proposition.

“This important provision provides for a grant of administration with the will annexed (cum testamento annexo) in the circumstances stated.  Although the section states that the grant can be made ‘to such person or persons as the court thinks fit’, in fact the grant is made in accordance with the Non-Contentious Probate Rules.  This section should thus be read in conjunction with the NCPR r19, which lists the order of priority of persons entitled to apply for such a grant ……”

(d) I agree with Ms. Ling only to the extent that the Court will usually follow the order of priority in issuing letters of administration with Will annexed according to rule 19 NCPR.  Generally speaking, before a grant is issued, the applicant has to “clear off” those person(s) having prior right(s) than him.  However, I do not agree, as a matter of principle, on a literal or purposive construction of section 35(1)(f), “… letters of administration with the Will annexed may be granted to such person or persons as the court thinks fit (emphasis added) does restrict the discretion of this Court as suggested by Ms. Ling.  Further, as a matter of fact, the parties enjoy the following “capacities” under the Will:

(i) the Applicant as one of the executors, residuary legatees/devisees and specific devisee;

(ii) the Defendant as one of the executors and residuary legatees/devisees, and

(iii) the Granddaughter and the Grandson as residuary legatee and devisees.

Hence, in the end, if one can only stick to the priority in rule 19 NCPR, the deadlock will never be resolved.  The Applicant and the Defendant cannot resolve the problem.  The Granddaughter and the Grandson are apparently not willing to take up the matter themselves.

(e) Mr. Lim told me that the Defendant was in breach of the duties as an executor.  Ms. Ling persuaded me otherwise.  Both parties filed extensive evidence attempting to blame each other, regrettably some even touching on the Deceased.  In my view, I need not resolve these disputes within the proceedings herein.  It suffices for my present purpose to be satisfied on balance that “the executors do not apply for probate”.

(i) The Applicant has made clear that she does not and will not apply for the probate and ask this court to appoint HSBC instead;

(ii) The Defendant has taken up the job for 6 years, but he is still stuck with the Estate Duty Office.  I am not satisfied, on balance, that he can complete the estate duty clearance within reasonable time in the future.  As such, in a wide sense, he does not and will not apply for probate.

(iii) Serious allegations have been made against the Defendant including disposing part of the Estate (sale of a flat held by the Estate by way of 59.5% shares in a limited company) without account. He further lied to her own daughter (the Granddaughter) that she was not a beneficiary under the Will.

(iv) Both the Granddaughter and the Grandson support the present application.

(f) Both Mr. Lim and Ms. Ling asked me to give respect to the intention of the Deceased, by way of the Revoked Will and the Will respectively.  As to the Revoked Will, it is not denied that the same was “revoked” by the Deceased.  Regarding the Will, it appears to me that the choice of executors by the Deceased is not successful and this Court therefore has to decide who should be appointed instead in the circumstances in order to achieve the ultimate distribution of the Estate as directed by the Will.

(g) Finally, as to the costs of appointing HSBC, the fall back position of Ms. Ling is that they should not be borne by the Estate.  However, in my view, it is a fair way to deal with the matter.  Further, I have no doubt that it will cost something by the appointment of an independent administrator.  However, in the long run, the Estate and all the beneficiaries will be benefited from it in terms of time, interest and costs.

Conclusion

7. In the circumstances, I direct that:

(a) Subject to the filing of all requisite papers, including the estate duty clearance papers, and the compliance of the requirements of the Registrar, the letters of administration with Will annexed relating to the estate of Madam SO LAN FONG is to be granted to the Hongkong and Shanghai Bank Corporation (the Executor and Trustee Department) (the “Independent Administrator”) under section 35(1)(f) of the Probate and Administration Ordinance (Cap.10).

(b) The costs of the Independent Administrator are to be borne by the said estate and to be levied as per the letter of 7 July 2006 written by the Independent Administrator to the Applicant’s solicitors.

(c) There is an order nisi that the costs of these proceedings, including certificate for counsel for hearing on 4 December 2006 and all costs orders reserved, shall be borne by the Defendant to the Applicant, on a party-and-party basis, to be taxed if not agreed.